US Elections to See First Prediction Market ETFs Launched by Wall Street

Roundhill Investments is poised to introduce the first US exchange-traded funds tied to prediction markets, with the launch of six funds that track the control of the White House, Senate, and House by Democrats or Republicans. According to SEC filings, the funds will be listed on May 5, as confirmed by Bloomberg ETF analyst James Seyffart.

The funds in question are the Roundhill Democratic President ETF, Republican President ETF, Democratic Senate ETF, Republican Senate ETF, Democratic House ETF, and Republican House ETF. These products are linked to the outcomes of the November 3, 2026, elections for the House and Senate, and the November 7, 2028, presidential election. Exposure is gained through swap agreements that reference binary event contracts traded on CFTC-regulated markets, with these contracts settling at $1 if the outcome occurs and $0 if it does not. The prospectus highlights in capitalized text that if the targeted party fails to win, the fund will lose nearly all its value.

Rather than terminating the funds after settlement, Roundhill will roll them into the next cycle once the market prices a winner above $0.995 or below $0.005 for five consecutive trading days. The prospectus also notes that if the market's outcome is later proved incorrect, shareholders will have no recourse. Other companies, such as Bitwise and GraniteShares, have filed similar proposals, with Bitwise's funds terminating shortly after each outcome is determined, while GraniteShares rolls into the next election. Prediction markets like Polymarket and Kalshi already trade political event contracts, but wrapping them in ETFs could expand accessibility by allowing them to be held in standard brokerage accounts and certain retirement accounts.

This development follows the CFTC's withdrawal of a proposal that would have banned political event contracts, although state regulators in several states continue to challenge the underlying contracts in court. Roundhill has also filed to list non-political prediction market ETFs tied to the possibility of a US recession, as reported by Bloomberg ETF analyst Eric Balchunas.